A Health Affairs blog entry looks at how the huge safety-net system NYC Health +Hospitals has built a highly successful Accountable Care Organization since 2012 to participate in the Medicare Shared Savings Program (MSSP). Indeed, the authors report that NYC Health + Hospitals’ ACO has cut costs to Medicare by more than $31 million and generated $14 million in shared savings payments. The organization has cut costs by 4-12 percent each year compared to benchmarks, and, they write, is New York City’s only ACO to earn shared savings each year in MSSP.

To help achieve this success, it collected claims data to track the histories of 12,000 Medicare patients, many of whom are dual-eligible with Medicaid. It then used that information to chart future care.

The data suggested that the ACO should focus on the chronically ill needing complex care, and less on overuse of healthcare services.

The ACO integrated clinicians into the initiative, and sought to develop physician leaders for it. Clinicians got wide autonomy to shape the program to fit patient needs within a shared goals

The authors wrote that NYC Health + Hospitals is applying the lessons learned to other populations, particularly Medicaid and uninsured patients.

Howard Graman, vice president of AMGA Consulting Services, formerly the CEO of PeaceHealth Medical Group and formerly executive director and medical director at Cleveland Clinic, writes about hospitals’ need to make sure that their reporting is right as they move to value-based care. Among his observations in an piece for Hospital Impact:

1. ACO reporting

“Currently, there are more than 400 Track 1 Accountable Care Organizations that are required to report on more than 30 measures—which, in the aggregate, determine whether an organization will be eligible to share in any savings. The higher the aggregate quality score, the greater share of savings that can be retained by the respective provider organization.”

“A critical element of reporting through the group practice reporting option is how the health system selects its ‘groupers,’ that is, the denominator of patients who should be included in any given metric. If the groupers are too broad, there is a risk that patients in the attributed group are included even though they do not have the related diagnosis.”

2. Compensation plan value metrics reporting

“Increasingly, more and more medical groups are incorporating value metrics into their compensation plans, with the average group putting at least 5-10 percent of physician compensation at risk for quality.”

“As opposed to ACO reporting, which includes claims-based metrics and is population-based, most compensation plan reporting depends on visit-based metrics, which measure those patients actually seen in active management. Here, the reporting data is derived directly from the electronic medical record. The creation of reports depends on a careful analysis of the practice workflow and building the report to ensure that credit is given for achievement of the desired endpoints.”

“Repeated testing prior to going into production for all compensation-related metrics is crucial, as it creates a trusting relationship between the medical group and the reporting team.”

3. Guideline adherence monitoring

“As groups become more sophisticated, a next logical step is to move into the realm of guideline-based care. As an approach that has the potential to both improve outcomes and reduce cost, there is much to be gained.

“While most medical groups employ a joint effort between informatics/IT and practicing clinicians to create the evidence-based order sets, it is not unusual for the reporting team alone to create the scorecards for reporting how often individual providers use the preferred pathway. Here again, clinician input is crucial—and its absence can be catastrophic.”

And as Healthcare Dive notes: “While some industry experts have posited actionable items to enhance competition, a flurry of regulatory actions and regional influences could increase consolidation even more, leading to even less competition.”

“Rising expenses and declining admissions alongside flattening reimbursements – as well as alternative care settings competing for the one-and-done low acuity patient visits – make for an unfortunate financial reality for some hospitals. Some have found it best to put up a ‘For Sale’ sign.”

“Healthcare and hospital prices will ascend to the level a market can take on. If a provider has a large monopoly in a market/region, prices can actually rise to offset rising expenses and declining patient volume since they have greater power at the negotiating table over insurers.”

Meanwhile, the publication said, Martin Gaynor, Farzad Mostashari and Paul B. Ginsburg recently advanced, in a Brookings Institution report, some suggestions on how to encourage competition in the industry, including, in Healthcare Dive’s shorthand:

“Increasing scrutiny on mergers.

“Stop paying more for the same outpatient services.

“Encouraging provider competition.

“Improving transparency.

“Ending anti-competitive practices, such as anti-tiering and anti-steering.

The authors of an article in Health Affairs look at future CMS payment models based in part on recent payment evolution. Among the predictions:

Population-based models and disease-specific models will continue to develop.

”As ACOs mature and stabilize, opportunities exist to expand them to cover more lives and allow more providers, payers, and organizations to participate in accountable care. More established ACOs will need to expand the spectrum of healthcare providers they work with including behavioral- health, post-acute care and pharmacy providers, and will need to consider the socioeconomic needs—like transportation, housing, and education—of their patient populations.”

”CMS has relatively few disease-specific models, which offers an opportunity to take knowledge gained from current programs and expand to other diseases and co-morbidities through either specialty ACOs or bundled payment programs. The Oncology Care Model and the Comprehensive End-Stage Renal Disease (ESRD) Care Model are two examples of disease-specific models. The ACO movement has focused around primary and general care, but ACOs are most successful when they include providers that are involved at all levels of patient care, including specialists.”

More efforts to show bigger cost-savings

As the healthcare culture shifts to adopting value-based care, ”opportunities exist for more payment models and models that involve higher levels of risk, although mandatory demonstration models are unlikely to continue” if, as expected, Tom Price, M.D, becomes health and human services secretary.

”As ACOs demonstrate success and more physicians have confidence in accountable care, ACOs can move from shared savings-only to taking on more risk.”

Efforts to encourage growth of multi-payer, state and wider- region initiatives

”Multi-payer initiatives spread cost among different payers—for example, commercial and Medicaid—and provide a shared incentive to improve quality and care. When multiple stakeholders work together toward a common goal, collaboration is rewarded and patients benefit. State and regional initiatives also allow states greater flexibility in implementing programs that work best for their populations.”

”Maryland, Vermont and Colorado serve as examples of state multi-payer initiatives. Each of these state’s programs are designed to improve primary care through promoting care coordination, health management, patient-centered care, and disease prevention.”

Concurrent models will be developed

”For some physicians, particularly specialists, aligning different payment models might make more sense than being restricted to a single model. For example, participating in different bundled-payment programs could benefit a specialist who has less influence than a primary-care physician over a patient’s overall health management. CMS has an opportunity to provide clarity and guidance to physicians on which models work best together for different types of physicians or practices.”

The Republicans’ promise to repeal the Affordable Care Act not only threatens to deprive millions of people of their health insurance; it could drive many hospitals deep into debt and destroy innovative programs created by the ACA aimed at improving patient care.

Timothy Ferris, M.D., an internist and medical director of the Mass General Physicians Organization, told FierceHealthcare that he worries that the “progress we’ve made over the past five years would be threatened.”

He said that includes programs through the Accountable Care Organization (ACO) at Massachusetts General Hospital, including experiments with video consultations and home hospitalization.

Dennis Keefe, head of Care New England, in Rhode Island, told NPR that he is concerned about the future for Integra, an ACO that includes primary- care physicians, specialists, urgent-care and after-hour providers, clinics, laboratories and inpatient facilities.

Hospitals and healthcare systems that have spent the last six years trying to create new value-based, patient-centered models as part of the ACA. And so 120 organizations sent a letter to President Trump and Vice President Pence urging them to not roll back progress they have made.

CMS has come out with details of its newest Accountable Care Organization (ACO) offering in the Medicare Shared Savings Program — Track 1+ — intended to push more small physician practices and small rural hospitals to adopt risk-based systems.

Becker’s Hospital Review has come up with five things to know about the Track 1+ Model. Here’s our edited version of the list.

1. “The Track 1+ Model is a hybrid of Tracks 1 and 3 of the MSSP. It lets practices begin to take on some downside risk, but limits exposure. The downside risk in Track 1+ is more limited than that of Tracks 2 or 3. ”

2. “It qualifies as an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act. Clinicians can enroll in the program to start in 2018. Those who participate may be eligible to earn the lump sum incentive payment for Medicare Part B payments under the advanced APM track beginning in the 2018 performance year. By adding this option as an advanced APM under MACRA, the agency expects an additional 70,000 physicians to qualify for incentive payments in 2018.

3. “The model follows that of MSSP Track 1 with a few key differences. The elements of Track 3 included in the new model are as follows:

Prospective beneficiary assignment.

Option for symmetrical thresholds for shared savings and losses.

Option to use the three-day skilled nursing facility. waiver, allowing ACOs to admit patients to SNFs without a minimum three-day inpatient hospital stay.

4. “The program has a 50 percent maximum shared savings rate. For perspective, Track 2 has a 60 percent MSR and Track 3 has a 75 percent MSR. Track 1+ has a fixed 30 percent loss sharing rate and the maximum level of downside risk will vary. Depending on the ACO composition, the maximum loss limit will be capped at 8 percent of Medicare fee-for-service revenue or 4 percent of the updated historical benchmark. Lower levels of risk may be offered for ACOs with independent physicians or small rural hospitals.”

5. “The application process will follow the same timeline as all other MSSP applications. CMS has not yet finalized application details, but interested ACOs will need to submit a letter of intent in May 2017. New ACOs and Track 1 ACOs will be eligible to apply. In addition to 2018, CMS plans to offer the model in 2019 and 2020.”

South County Health, a small nonprofit system in bucolic southern Rhode Island, owes a large part of its success to its ability to manage transitions of care – an increasingly urgent imperative as healthcare moves from fee-for-service to value-based reimbursement.
The system’s flagship is South County Hospital, a 100-bed community hospital. The system also includes South County Home Health Services (a home health agency); South County Surgical Supply (home medical supplies); South County Medical Group, with 65 physicians and advanced-practice providers, and two Medical and Wellness Centers, one in Westerly and the other in East Greenwich, with urgent-care facilities and an array of primary-care and specialist physicians.

South County Hospital has long had very high marks for quality and patient satisfaction. Indeed, surveys have often called it the best hospital in its state and one of the best in New England. It was recently awarded a five-star rating by the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), putting it in the top 2 percent of those surveyed nationwide.

Louis R. Giancola, the system’s president and chief executive, attributes much of the hospital’s success in patient satisfaction — and fiscal stability — to the strong engagement of its staff, which “we keep in the know’’; a “supportive board’’; the long-term loyalty of people in the service area, and the “nimbleness of a community hospital’’. Having a relatively affluent market with many well-insured people hasn’t hurt either, he acknowledged.

Mr. Giancola.

A particular point of pride is: “We’re good at transitions of care. Maybe that’s a result of our being small.’’

South County Hospital, like virtually all health systems these days, faces many challenges in dealing with the rewards and penalties involved in the forced-march transition to value-based reimbursement. Mr. Giancola notes:

“Medicare incents us to improve patient satisfaction, reduce hospital infections and avoid various patient injuries. Most commercial payers (insurers) have followed suit. I believe the threat of reduced payments has focused our attention on these measures even though we sometimes complain that the measures are not always fair.’’ (See below.)’’
“It’s all about blocking and tackling. The biggest issue is readmissions within 30 days. {South County has long had lower readmission rates than most hospitals.} We’ve really focused on managing the transition from the hospital to another level of care. The important element is good communication between the hospital providers and the skilled-nursing facility, home health and the doctors caring for the patients in the community.’’

Part of South County’s recognized success in overseeing clinically successful and financially efficient transitions – and, in so doing, reducing costly readmissions — has been its emphasis on using, when possible, home health care instead of nursing centers to save money and improve care, Mr. Giancola said.

The Centers for Medicare & Medicaid Services and other regulators and payers have been pushing hard for better patient-care management, especially since the Affordable Care Act took full effect. Much of South County Health’s work in this area involves helping primary-care physicians to be better traffic managers of their patients’ care.

Another transition success story he cites is medication reconciliation. “Often patients are confused about their drugs and that can lead to readmission because they take drugs that are contra-indicated or they take two meds designed to address the same problem. We’ve hired pharmacists that review meds in the hospital to ensure they are reconciled and the patients get clear advice on discharge.’’

He notes as an example of what might sometimes be unfair pressure from the Feds: CMS’s making hospitals put many patients who have to stay in the hospital for a night or two into “observation’’ status instead of as inpatients, thus slashing potential hospital reimbursement.

Bundled payments, Medicaid and an ACO

An increasingly important strategy for controlling costs and improving care is bundled payments.

South County Health participates in a bundled-payment program for joint-replacement patients with Blue Cross for their Medicare Advantage and commercial-insurance members. (Cambridge Management Group has been doing a lot of work in bundled-payment programs and so this particularly caught our eyes.)

With older-than-average market demographics, the joint-replacement business is a major contributor to the system’s bottom line. (However, while the system is financially stable, its operating margin is only about 2 percent; the system is closely managed.)

Mr. Giancola said that, as with many things in the brave new world of value-based medicine, it’s unclear what sort of savings may come out of the move to bundled payments. However, he thinks that the clinical benefits are clear:

“The bundling process helps us to get a better handle on the clinical process. Having to report quality throughout the entire episode of care makes for better transitions and final outcomes.’’

South County Hospital’s leaders are happy that the Affordable Care Act has put so many uninsured people into Medicaid. While Medicaid reimbursements lag those of Medicare it’s a lot better than no insurance for low-income people. Many of those people, of course, have long used the emergency room as their major source of “free’’ (to them) medical care.

But, perhaps surprisingly, Mr. Giancola told us, Medicaid expansion has not yet cut the flow of people into South County Hospital’s ER, despite efforts encouraged by public and private insurers to promote more and better preventive care to keep people out of the ER. “ERs are too handy for lots of people,’’ he observed.

South County Hospital has had to deal with many other changes, whose long-term fiscal effects are difficult to predict. One is the rising number of employed physicians, hired, Mr. Giancola says, to ensure that the hospital can maintain the range of services that patients want and need in an acute-care facility, such as obstetrics.

Mr. Giancola notes that’s expensive. “Hiring doctors away from private practices to be based in the hospital puts them in more expensive places, with expensive support staffs, equipment and technology. The jury is out on whether the increase in hospital-employed physicians will save money in the long run.’’

Also unknowable at this point is whether South County’s participation in an Accountable Care Organization with Blue Cross & Blue Shield of Rhode Island (BCBSRI) and Integra Community Care Network will ultimately save money. Integra is a partnership of Care New England Health System and its network physicians, Rhode Island Primary Care Physicians Corporation and South County Health and its network physicians. Focused on population-health management, the ACO provides incentives for Integra’s providers to proactively manage patient health, with a heavy emphasis on prevention of illness, while trying to restrain costs.

South County Health, as befits a, well, beloved local institution is big on promoting community-wide collaboration of institutions that can help improve not just healthcare in a clinical sense, but population health.

Toward that end, it has brought together such diverse agencies as the YMCA, the five Federally Qualified Health Centers in its area, school systems, the local Community Action Program and community members to harness the resources of the community. Whatever happens to the ACA, the move toward community and population health will continue, and South County Health will help lead it in southern Rhode Island.

Mr. Giancola has written: “Our long-term goal is to inspire the broader community to see health as a community issue and to mobilize government, schools, businesses and citizens at large to rally around efforts to ensure a healthy community.’’

The CMS has announced that in January, Vermont will become the first state to move to a voluntary all-payer Accountable Care Organization model.

While Vermont’s program is somewhat modeled after a similar one in Maryland, the Maryland program covers only hospitals while Vermont’s will cover close to all providers. The Vermont ACO will include Medicare, Medicaid and commercial payers, requiring those who participate to pay similar rates for all services.The CMS is giving Vermont $9.5 million in start-up funding to support the transition. The demonstration project is supposed to last five years.

“This model is historic in terms of its scope, aiming to include almost all providers and people throughout the state in an all-payer ACO model to drive improved quality, better care coordination, healthier people, and smarter spending,” Patrick Conway, M.D., the CMS’s chief medical officer, said.

“We will become the first state in America to fundamentally transform our entire health care system so it is geared towards keeping people healthy, not making money,” said Vermont Gov. Peter Shumlin, who negotiated a deal with HHS Secretary Sylvia Mathews Burwell.

The state seeks to have 70 percent of its insured residents covered by an ACO by 2022. The model will be considered an advanced Alternative Payment Model under the new Medicare reimbursement program, making participants eligible for a performance bonus.

Vermont will limit per-capita annual spending growth for major payers to 3.5 percent and Medicare growth to at least 0.1 to 0.2 percentage points below projected national Medicare growth. In recognition of the role of behavioral health in other health, state officials also said they will seek to improve access to primary care and treatment for substance abuse, mental health and chronic disease as part of the ACO project.

The Vermont Legislative Joint Fiscal Office said that better care and an improved state economy might well come out the initiative. However, it also warned of such risks as uncertainty that the federal funding would cover transition costs and whether all providers will be adequately represented.

The nation’s largest health insurer and the University of California Health system are joining forces to create a new health plan option for employers and expand research into patient data.

Under the 10-year partnership unveiled Thursday, UnitedHealth Group Inc. and the UC system will form an Accountable Care Organization (ACO) that will be offered to large, self-funded employers statewide. In ACOs, physicians, hospitals and an insurer work together to coordinate care, control spending and share savings.

The for-profit insurer will also open a research lab in the San Francisco area early next year offering researchers at the state-run health system access to a huge national database of patient records.

The collaboration comes as hospital systems and insurers are under increasing pressure from employers, government health programs and their competitors to forge new alliances aimed at improving care and cutting costs. It also reflects the growing importance of data-mining to achieve those goals by identifying disease earlier and finding more effective treatments.

The deal marks UnitedHealth’s continued interest in growing its California business despite its decision in May to leave the state’s health-insurance exchange.

The company’s Optum unit was recently awarded a five-year contract to manage pharmacy benefits for the California Public Employees’ Retirement System, and UnitedHealth is expanding its presence in Medi-Cal, the state’s Medicaid program. The company said it now serves more than 3.5 million Californians.

The UC system runs five academic medical centers — in Los Angeles, San Francisco, San Diego, Irvine and Davis — including hospitals, medical groups, clinics and other outpatient facilities. They will continue to work with other insurers such as Anthem Inc. and Blue Shield of California as network providers and in other ACOs.

But UnitedHealth offered several advantages compared to its rivals in terms of data-mining capabilities and administrative support for hospitals and physician offices through its consulting unit, said David Kraus, chief contracting and clinical strategy officer for the UC Health system.

“What was unique about UnitedHealth is they are more than just a health plan,” Kraus said. “This collaboration helps us advance things quicker.”

Kraus said the university system and UnitedHealth want to learn from the mistakes of earlier ACOs and offer employers a more centralized approach that can tap into real-time data as patients move through the healthcare system.

“A lot of employers have a physical health product unrelated to a mental-health product unrelated to their wellness program, which is completely unrelated to the pharmacy benefit. We think it needs to be all together, and we get to build this ACO from the ground up,” Mr. Kraus said.

The financial terms of the partnership weren’t disclosed. Mr. Kraus said a joint governing board would establish the specific financing for individual projects and determine how much each organization contributes.

“We will look at pilots and talk about which ones to invest in and where,” Kraus said. “It could be 80 percent-20 percent or 60-40. We haven’t boxed ourselves into a preordained structure.”

Steve Valentine, vice president and West Coast consulting leader at the healthcare consultancy Premier Inc., said the deal brings together two highly regarded organizations, but he said that some employers chafe at the high cost of UC facilities.

“UC has to address its whole cost structure,” Valentine said. “They tend to be more expensive so they will need to address pricing to be competitive.”

UnitedHealth is playing catch-up in a crowded market. Anthem, the nation’s second-largest health insurer, has been the dominant player in California for self-funded employers. In that scenario, large employers have the financial resources to pay their own medical claims. They hire an insurer to administer the health plan and create a provider network.

Anthem had a 37 percent share of the 6.4 million Californians covered by the self-funded market in 2014, according to data from the California Health Care Foundation. Cigna Corp. was second with 24 percent market share, followed by UnitedHealth and Blue Shield of California at 13 percent apiece.

HMO giant Kaiser Permanente has a smaller presence in the state’s self-funded market. In the fully insured market for large employers, Kaiser Permanente leads the state with a nearly 50 percent share.

Under the new deal, the insurer will establish an office in the San Francisco area for OptumLabs. UnitedHealth founded OptumLabs, a collaborative research center, with the Mayo Clinic in 2013. The headquarters is in Cambridge, Mass. Other partners, such as AARP, Harvard Medical School and Pfizer later joined the research effort.

OptumLabs said it would provide UC researchers and physicians access to one of the nation’s largest databases of medical claims, although it would not be publicly available and patients’ identities would not be revealed. It contains claims information on more than 150 million people going back two decades. It also includes electronic medical records on another 50 million patients.

In one research project, OptumLabs has examined whether scanning the narrative portion of electronic medical records could indicate which patients are at risk of developing Alzheimer’s disease rather than waiting for physician tests down the road.

“There is so much depth of knowledge in the University of California system and we are certain when some of that expertise is applied to the data at OptumLabs it will really move us forward,” said Paul Bleicher, M.D., chief executive officer of OptumLabs. “We work on the most difficult problems in health care.”

The two organizations also want to use the California office of OptumLabs to lure young data scientists into the medical field rather than lose them to game developers or social media in Silicon Valley.

“Everybody is struggling with the fact that Facebook, Google and other tech companies are very attractive and obvious targets for new graduates coming out,” Dr. Bleicher said. “This will help bring in UC students to work on our data.”

Healthcare leaders at the Geisel School of Medicine at Dartmouth College and the affiliated Dartmouth-Hitchcock Medical Center have been busily explaining to the national news media their decision to scrap their Accountable Care Organization — a model mostly invented at Dartmouth.

A New York Times story said that Dartmouth’s ACO cut Medicare costs on hospital stays, tests, imaging and other procedures. But although it met its goal for quality of care, the Feds still penalized Dartmouth’s ACO for not reaching cost-savings benchmarks, which prompted it to exit the program last fall.

Robert A. Greene, M.D., an executive vice president in the Dartmouth-Hitchcock Health System, told The New York Times that that the cost-cutting, in combination with federal penalties, was not sustainable for the system. Elliot S. Fisher, M.D., director of Dartmouth Institute for Health Policy and Clinical Practice and one of the designers of the ACO model, noted the disappointment of himself and his colleagues.

“It’s hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with,” Dr. Fisher told The Times.

A Health Affairs blog post said that the Centers for Medicare & Medicaid Services data suggest that while more ACOs are finding success, financial performance and health outcomes can vary widely across America. In late August, CMS reported that that fewer than a third of ACOs qualified for Medicare bonuses.